Thoughts from the TTABlog: Fraud in the Post-Bose Era

I was recently asked by World Trademark Review to provide a short article on how the Bose decision has thus far impacted TTAB practice. My current thinking is set out below, admittedly based on limited information.


Fraud in the post-Bose era
The CAFC's decision in In re Bose Corporation, 91 USPQ2d 1938 (Fed. Cir. 2009) brought an abrupt end to the reign of Medinol, when fraud was a favored avenue of attack in Trademark Trial and Appeal Board inter partes proceedings. Once a party discovered that the other side had filed its use-based application or maintained its registration for a mark that was not in use for all the listed goods or services, it was a sure ticket to summary judgment for fraud. The attacking party did not have to prove that its adversary intended to deceive the US Patent and Trademark Office (USPTO), but only that the adversary "knew or should have known" that its statement regarding use was false.

After Bose, "knew or should have known" is not enough. But it will be a rare case indeed when a party will find proof that the other side intended to deceive the USPTO. What then is left of the fraud doctrine? How does a party plead and prove fraud in the post-Bose era? Two recent TTAB interlocutory rulings provide an indication that it will not be easy.

In Societe Cooperative Vigneronne Des Grandes Caves Richon-Lezion and Zicron-Jacob Ltd v Albrecht-Piazza LLC, Opposition No. 91190040 (September 20, 2009), the TTAB required the applicant-counterclaimant to amend its fraud-based petition for cancellation in light of Bose. The TTAB would not accept a “knew or should have known” allegation, observing that “pleadings of fraud made ‘on information and belief’ where there is no separate indication that the pleader has actual knowledge of the facts supporting a claim of fraud … are insufficient.”

The TTAB pointed to the requirement of FRCP 9(b) that the pleadings "contain explicit rather than implied expression of the circumstances constituting fraud." Moreover, there must be some "separate indication that the pleader has actual knowledge of the facts supporting a claim of fraud."

So how does one plead a fraud claim post-Bose? It appears that one must expressly allege that the adversary knew that the statement was false and intended to deceive the USPTO. What specific facts may be alleged to support that allegation? One might set forth the facts surrounding the pleader’s investigation into the use or non-use of the mark in question, but that would not seem to fit the bill.

Indeed, a party may have to refrain from pleading a fraud claim until after discovery has revealed sufficient facts to satisfy the pleading requirement. This may be particularly problematic when an application filed under the Madrid Protocol is being opposed. Under Trademark Rule 2.107(b), a notice of opposition filed against a Section 66(a) (of the Lanham Act) application may not be amended to add grounds for opposition. How then, without discovery, can one meet the pleading requirement for fraud?

The TTAB drove its own stake through the heart of Medinol in its first precedential ruling on fraud since Bose. In Enbridge Inc v Excelerate Energy Limited Partnership, Opposition 91170364 (October 6 2009), Opposer Enbridge moved for summary judgment on the ground of fraud, claiming that Applicant Excelerate had never used the applied-for mark for various services recited in its use-based application. Excelerate admitted that it had never used the mark for one of the listed services, the transmission of oil, but the TTAB denied the motion because there existed genuine issues of material fact regarding whether Excelerate "knowingly made this representation of use with the intent to deceive the USPTO."

Excelerate characterized "the statement in its application that it provided 'transmission of oil' as 'an inadvertent, honest mistake'" and maintained that its subsequent amendment of its recitation of services [after the opposition was filed] "corrected its error in good faith." That was enough for the TTAB. It ruled that "[a]t a minimum, whether applicant knowingly made this representation of use with the intent to deceive the USPTO remains a genuine issue of fact to be determined at trial."

The TTAB pointed out that "[u]nless a party alleging fraud can point to clear and convincing evidence that supports drawing an inference of deceptive intent, it will not be entitled to judgment on a fraud claim." Once Excelerate (not unexpectedly) claimed innocence, it was up to the opponent, Enbridge, to provide proof of Excelerate’s intent to deceive the USPTO. Of course, had Enbridge known that the Medinol standard for proof of fraud would be jettisoned, it perhaps might have changed its approach to the case in seeking the now-required proof.

It seems clear that proving a fraud claim on summary judgment may have become an historical relic. In Medinol, the TTAB entered summary judgment sua sponte on the ground of fraud. But in the post-Bose era, one will need to find the proverbial "smoking gun" before the TTAB will enter summary judgment for fraud.

Applicants and registrants would still be wise to conduct "fraudits" of their existing applications and registrations to see if there might be any problems regarding use of their marks. An amendment to correct any false statement of use would surely bolster a claim of innocent mistake should an application or registration ever be challenged on the ground of fraud.

Text Copyright John L. Welch 2009.